Berkadia Claims Cross Bridge Title Assisted in Fraud Scheme

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Berkadia claims it lost over $24 million in Mordechai Weiss’ alleged fraudulent apartment deal in Houston.

The firm filed an explosive lawsuit alleging Weiss, Howell, New Jersey-based Cross Bridge Title and Elya Kahn of Greenrock Funding worked together to create a document trail for a “sham transaction” showing a sales price of $97.8 million to Berkadia. The fake documents paved the way for Berkadia to make a $69 million loan to Weiss and his affiliated company. 

But Berkadia alleges the sales price was actually $67 million and the scheme allowed Weiss to buy the Houston property with no equity. 

Berkadia filed the lawsuit in federal court in May against Cross Bridge Title, which provided escrow and title services on the deal. It also named title insurer Old Republic as a defendant for refusing to cover its losses.

The lawsuit is similar to other allegations brought by the Department of Justice and the Federal Housing Finance Agency as part of an expanding investigation into commercial mortgage fraud. Some of these lawsuits have led to indictments and jail sentences. Notably, Aron Puretz of Apex Equity was sentenced to five years in prison for his involvement in an illegal flip of an office complex in Troy, Michigan. Puretz presented JPMorgan with a fake purchase price of $70 million in order to secure a larger loan than he otherwise would have received. 

In many of these schemes, purchase prices were inflated in order to obtain larger loans from Fannie or Freddie. The schemes allowed investors to buy multi-family without putting in any equity. 

Monsey-based Mordechai Weiss has been under scrutiny from federal agencies, according to sources. Companies affiliated with Weiss secured seven loans from Fannie or Freddie to buy 11 apartment complexes across the country. Fannie had purchased six loans on Weiss’ properties by early 2024. Weiss has not been formally accused of any wrongdoing and the DOJ has not brought charges. 

The Berkadia lawsuit, however, sheds light on what a federal investigation may uncover. It alleges that the Houston deal began in late 2023. 

Elya Kahn, a broker at Greenrock Funding, approached Berkadia’s Yuri Kletsman to finance the acquisition of a 326-unit multifamily property in Houston, called the Virtuo Med Center Apartments, according to the lawsuit.

Kahn presented Mordechai Weiss of “Weiss Property Group” as the buyer. Weiss managed 700 units in Houston and thousands nationwide, per Kahn’s alleged telling. 

In March, Berkadia agreed to provide a $69 million loan to fund Weiss’ $97.8 million acquisition of the Virtuo apartments. The deal meant Weiss would have had to chip in $29 million of his own money to complete the acquisition. Berkadia planned to sell its loan to Freddie Mac, a government-sponsored agency that buys loans from private lenders such as Berkadia.

Yet, Berkadia alleges that the purchase price was not real. 

Berkadia received multiple documents from the title agency Cross Bridge, which acted as the connector to title insurer Old Republic. 

Berkadia first received an April 2023 title insurance policy by Old Republic, showing a $67.1 million policy attached to the property owner. Days later, Berkadia received another document, this one showing a $97.8 million policy, the amount of the fake purchase price. 

“Berkadia believes the April document was the actual title insurance commitment for the real $67,000,000 transaction. The May document was fake, generated for the sole purpose of supporting the fraudulently proffered $97,800,000 transaction,” Berkadia’s lawyers said in the lawsuit. 

In June, there were more signs that something was off. Just as Weiss was set to close, Berkadia sent over escrow instructions to Cross Bridge. Berkadia asked for a “settlement statement,” which is a form showing financials and costs of a property. 

Cross Bridge sent over three different versions of the statement. 

One of which had the actual $67 million sales price. Cross Bridge’s Asher Rendler told Berkadia the document was sent over in mistake. 

“Please sorry I am crossing my files, please disregard will send shortly,” said Rendler, according to the lawsuit.

Berkadia said it believed the document showed the true sales price. Cross Bridge finally sent over another settlement statement, once again displaying the fake purchase price.

Berkadia called Cross Bridge “an active participant in the fraud, as evidenced by its sending to Berkadia both the true and the fraudulent versions of the title insurance commitment and the settlement statements while offering flimsy, if any, excuses.”

The lender said it does not believe Weiss put any equity into the deal. 

In November 2023, Weiss stopped making payments on the loan. Freddie Mac, which had acquired the loan from Berkadia, moved to appoint a receiver. In March 2024, Freddie Mac foreclosed on the property. Berkadia reached an agreement to pay off the $68.5 million loan, plus interest unpaid by Weiss. Berkadia was also charged a carrying fee. 

Freddie Mac obtained an appraisal valuing the property at about $44 million. This left Berkadia with a $24 million loss plus other charges, including legal fees. 

A Texas judge awarded a default judgment against Cross Bridge, stating the title agency failed to respond to the litigation by the required response date.

Berkadia did not return a request for comment. Kahn, Weiss and Cross Bridge also did not return requests for comment. 

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